BDO predict a bleak summer
The latest economic report by BDO Stoy Hayward puts economic growth at just 1.6% for the third quarter of the year, significantly lower than the forecasts of Gordon Brown and his Treasury team.
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In its Optimism Index, the mid-tier firm said the looming conflict in Iraq was weighing down heavily on company decision makers, who, it said, are ‘postponing purchase decisions and expansion plans’.
Data from the index revealed that it has fallen for the fourth consecutive quarter to 98.6, its lowest level since the immediate aftermath of the September 11 terrorist attacks in the US.
This goes against the predictions of the chancellor who expects the UK economy to grow by between 2.5% and 3% this year. In a speech made to the Social Market Foundation yesterday, Brown said the country’s economy was in a healthy position.
BDO, in its Business Trends Report also advises the Bank of England to cut interest rates to 4% when it next meets this week, as businesses and consumers begin to ‘feel the pinch’.
The only positive sign was an easing in inflationary pressures as the inflation index fell for the third quarter in a row.
Peter Hemington, partner at BDO Stoy Hayward said: ‘A return to 3%-plus economic growth, however, looks a distant prospect.’